European markets lower after G-20 summit

November 17, 2008 4:38:21 AM PST

By PAN PYLAS, AP Business Writer

LONDON - November 17, 2008 --

European stock markets traded modestly lower Monday following a mixed performance in Asia as investors pored over the results of world leaders's summit in Washington to discuss reform of the stricken global financial system. The FTSE 100 index of leading British shares was down 46.32 points, or 1.1 percent, at 4,186.65, while Germany's DAX was 40.50 points, or 0.9 percent, at 4,669.74. The CAC-40 in France was down 31.45 points, or 1 percent, at 3,260.02.

Earlier, Asian markets were relatively flat despite confirmation Japan slipped into recession in the third quarter of the year for the first time since 2001.

Japan's benchmark Nikkei 225 stock average edged up 60.19 points, or 0.7 percent, at 8,522.58 after trading as high as 8767.98 and Hong Kong's Hang Seng index gave up early gains to dip 0.1 percent to 13,529.53.

The principal focus of attention for markets as the new week kicks off was the meeting of the G-20 world leaders in Washington. Though they provided a symbolic show of unity between rich and emerging nations, few concrete reform measures - aside from a commitment to further monetary and fiscal stimulus and free trade - were announced.

"No one was expecting any miracles out of the G-20 but having said that it was positive to get nations together in the first place," said Richard Hunter, a strategist at Hargreaves Lansdown stockbrokers in London.

"Europe's markets are holding up, showing some resilience given the weakness in the States on Friday," he added.

The Dow Jones industrial average tumbled 3.8 percent Friday after another session of volatile trading. Modest gains are anticipated when Wall Street opens later, with Dow futures up 31 points, or 0.4 percent, to 8,402.

Analysts said there was very little on the economic front Monday to prompt another bout of stock selling but sentiment remains fragile given mounting concerns about the state of the world economy.

"While equity markets have been stable over recent days and could continue to trade sideways in the near-term, risk aversion remains an underlying theme," said Hans Redeker, an analyst at BNP Paribas.

Japan became the latest country overnight to officially enter a recession. Official figures showed that the world's second-largest economy shrank an annual pace of 0.4 percent in the July-September quarter, meaning the country now joins the 15 nation euro-zone as officially in recession, defined as two straight quarters of contraction.

But with many companies having already announced significant downgrades to earnings forecasts, the Japanese market took the news of a second straight quarter of economic contraction in its stride.